Question
3. An analysis of the machinery accounts of Noller Company for 2015 is as follows: Machinery, Net of Accumulated Accumulated Machinery Depreciation Depreciation Balance at
3. An analysis of the machinery accounts of Noller Company for 2015 is as follows:
Machinery, Net of
Accumulated Accumulated
Machinery Depreciation Depreciation
Balance at January 1, 2015 $500,000 $125,000 $375,000
Purchases of new machinery in 2015
for cash 200,000 200,000
Depreciation in 2015 100,000 (100,000)
Balance at Dec. 31, 2015 $700,000 $225,000 $475,000
The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)
a. subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities.
b. addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities.
c. $100,000 increase in cash flows from financing activities.
d. $200,000 decrease in cash flows from investing activities.
4. Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This adjustments for this transaction should be shown on the statement of cash flows (indirect method) as a(n): (Hint: first calculate the gain or loss.)
a. addition to net income of $12,000 and a $111,000 cash inflow from financing activities.
b. deduction from net income of $12,000 and a $99,000 cash inflow from investing activities.
c. deduction from net income of $12,000 and a $111,000 cash inflow from investing activities.
d. addition to net income of $12,000 and a $99,000 cash inflow from financing activities.
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